Why the Pros Are Paying 220% Crypto Premium

Would you be happy to pay double the going rate to buy something?

I think I can say with utmost certainly, there are very few instances where anyone would say yes to this.

Whether it’s a used car, a house or even just a set of tea towels, no one knowingly pays over the odds for something, if they can get the same deal cheaper somewhere else.

Especially not when the price is more than double.

Yet that’s exactly what’s happening in one exciting part of the investment world.

People are happily paying a huge premium to get exposure to one of 2020’s best performing assets.

And I’m not talking ‘mug punters’ or uniformed people either. I’m talking, institutions and accredited investors. People who normally do their due diligence.

Which leaves only one possible conclusion…

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You’d have to assume, they’re happy to pay such huge premiums because they expect even better returns from their investment later on.

In their case, a minimum 220% return just to break even — with expectations of a lot more than that no doubt.

Now, here’s the thing…

Today you can buy into the same opportunity as them and get in at less than half what they’re willing to pay.

This is a rare opportunity and it’s there for the taking right now.

Let me tell you what it is and what you can do to take advantage of this weird situation…

Institutions paying 220% crypto premium

Fund manager, Grayscale runs a number of cryptocurrency trusts.

These trusts are an easy way for accredited investors (i.e. rich people) and institutions to get exposure to certain cryptocurrencies.

They’ve a fund for Bitcoin [BTC], one for Ripple [XRP], one for Zcash [ZEC], and a few other single-asset trusts on offer.

But it’s the fund for Ethereum [ETH] that caught my eye recently.

You see, last week saw investors pay a whopping 220% premium to get some crypto exposure.

As reported in Coin Telegraph:

Accredited investors are currently paying a 220% premium to buy Ether through Grayscale’s Ethereum Trust.

The price of a single share in the Ethereum Trust is currently trading for $81.50 even though one share represents Ether worth just $25.46. Yesterday the premium was even higher, at 312%.

The Grayscale Ethereum Trust has $154.5 million in assets under management and is aimed at institutional investors who are willing to pay a premium to avoid investing directly in cryptocurrency with its attendant custody and regulatory issues.

Such confidence is certainly helping the price of Ethereum, which is up a whopping 114% already in 2020.

Big investors are prepared to pay so far over the odds so that they can avoid a lot of ‘crypto headaches’ that come from owning cryptocurrency directly.

For them even with the inflated costs, many have deemed it an acceptable risk.

As I said before, they must be expecting Ethereum’s stunning rise to continue to be willing to overpay by so much.

Luckily, you don’t have to…

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We’ll help you to back yourself

You see with a little effort and thought, anyone can buy cryptocurrencies like Ethereum.

It’s not that hard.

But like anything new, it just takes a bit of concentration, especially as you familiarise yourself with some new concepts. I’m sure the first time you paid a bill with internet banking, you double and triple-checked the BSB and account number or BPAY code.

I still do!

Crypto is no different. And yet it is an entirely new technology, so naturally you don’t want to go in alone if you don’t have to.

You need a guide to help you navigate this new terrain. And I’ve the perfect candidate for you today.

My colleague and co-Editor here at Money Morning Sam Volkering is our resident tech expert, and he’s been in the crypto space longer than anyone I know.

There’s even a clip you can dig up of him being interviewed on US television (I think it was way back in 2014 or 2015) about how big bitcoin was going to be.

The interviewer laughed at him. But I bet he’s not laughing now.

This opportunity is here for the taking today, but it won’t be for long. The world is waking up to cryptocurrencies and their immense potential.

And in my opinion you’ll pay an even stiffer premium if you wait until it’s back in the mainstream headlines again before you make your move.

The next step is up to you.

Good investing,

Ryan Dinse,
Editor, Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends. Learn all about it here.


Ryan Dinse is an Editor at Money Morning. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.  


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